Since Rajan took the helm of the RBI in September, the RBI has raised interest rates three times by a total of three-quarters of a percentage point in an attempt to curb persistently high inflation.

Consumer price inflation picked up in April, while wholesale inflation moderated but remained at elevated levels.

Rajan is a former International Monetary Fund chief economist and is widely viewed as India's most capable technocrat, winning the respect of investors for his handling of a currency crisis that hit Asia's third-largest economy last year.

Rajan said he was worried about non-performing assets in India's banking sector but wanted to work with the new government to solve this problem quickly.

India's current account deficit, which has caused concern about economic imbalances, could fall to 2 to 2.5 percent of gross domestic product in medium term, he also said.

Narendra Modi was sworn in as India's prime minister this week after a sweeping election victory with a mandate to deliver better governance and economic stability.

There are concerns Rajan could come under pressure from the new government to take a less hawkish stance on inflation to revive economic growth and create more jobs.

Inflation is now running at double the RBI's longer-term 4 percent target, at a time when economic growth has fallen to its slowest in a decade.

Economic policy is arguably the most important area for India's new government as it seeks to drag the country out